HUD Stops Selling to Land Bank in Cleveland

HUD Stops Selling to Land Bank in Cleveland

Daily Real Estate News |
Wednesday, December 26, 2012

The Department of Housing and Urban Development announced it will no longer be selling foreclosed homes to a land bank for $100 each because it believes the homes could get far more by selling them on the open market, The Plain Dealer reports.

HUD’s National First Look Program was an effort to fight neighborhood blight in the city by allowing the Cuyahoga County Land Bank to acquire foreclosed properties and rehab or demolish them. The land bank, formed in 2009, had acquired about 850 properties and rehabbed about one-third of the homes.

“But the agency can no longer afford this arrangement and will resume selling its Cuyahoga County properties to speculators and others on the open market,” the Cleveland newspaper reports.

Brian Sullivan, HUD spokesman, says the housing market is recovering and HUD is likely able to recover more from its foreclosed homes than by selling them to land banks for such a low amount.

HUD is committed to “helping combat and reverse the effects of neighborhood decline,” Sullivan says. But, he adds, HUD also needs to raise more funds for the Federal Housing Administration’s Mutual Mortgage Insurance Fund, which faces a $16.3 billion deficit.